Sen. Baucus vs. Free Trade

At a Senate Finance Committee hearing on March 31, chairman Max Baucus of Montana spoke of boosting U.S. exports to Asia.

“In today’s world, we seek not to build, but to tear down the economic walls that divide us,” he said, in remarks about the Asia-Pacific Economic Cooperation forum (APEC).

Last week, Sen. Baucus took to the pages of the Wall Street Journal to advocate approval of the U.S.-Colombia Free Trade Agreement. “Trade is critical to American innovation and economic growth. It can expand opportunity for workers and entrepreneurs, both at home and abroad,” he wrote in an op-ed with Sen. John Kerry, Democrat of Massachusetts.

These are wonderful sentiments. It’s too bad that Sen. Baucus doesn’t apply them more broadly: He’s one of the major reasons why Congress has not yet approved the U.S.-Korea Free Trade Agreement, which would be America’s biggest and most important trade accord since NAFTA.

President Obama has called for passage of the Korean trade deal. So have both Democratic and Republican congressional leaders. Yet Sen. Baucus remains a stumbling block.

“I am deeply disappointed that [the] deal fails to address Korea’s significant barriers to American beef exports,” said Baucus in December. He kept up his criticism in February: “I don’t support Korea until Korea opens up its market,” he said.

Sen. Baucus likes to make it sound as though he’s defending the interests of ranches. Well, I’m a rancher and Sen. Baucus doesn’t speak for me. He doesn’t speak for many of the ranchers I know, either. We think the pending trade agreement with South Korea is a good one for our industry. It isn’t perfect, but it will knock over an economic wall that currently prevents us from selling beef worth millions of dollars a year to an important group of foreign consumers.

Ratification of the agreement would wipe out $15 million in tariffs in its first year, growing to $325 million annually by the time of its full implementation in a decade and a half, as a current tariff of 40 percent vanishes to zero. The National Cattlemen’s Beef Association believes that approval of the trade agreement would turn South Korea into a $1 billion market for U.S. beef. It could even become our top destination for beef exports. These sales will increase profitability for American ranchers, meaning that we’ll be able to expand our operations and hire more workers.

Yet this future requires final approval of a trade agreement that has languished since it was negotiated by the Bush administration. Although we’ve seen healthy growth in beef sales to destinations in Asia such as Japan and Hong Kong, our exports to South Korea have remained flat.

Choosing to do nothing almost certainly will cost market share. South Korea is now in bilateral trade talks with Australia. If it completes this deal before finalizing ours, it will give the Aussies a 2.67 percent tariff advantage over American-made beef for the next 15 years.

In fairness, it’s possible to imagine a better deal with Korea. The tariff phase-out could take place more quickly. Then there’s the central concern of Sen. Baucus: South Korea’s insistence that it won’t accept beef from cattle that is older than 30 months. This is a frustrating restriction because it’s based on unfounded fears about mad-cow disease.

Yet we cannot let the perfect become the enemy of the good--and the current accord with South Korea is a very good one. The tariff phase-out is acceptable and the limits on age won’t hurt American ranchers in practice. We can adjust our operations accordingly. That’s really what our business is all about anyway: meeting the demands of consumers.

“APEC has been extremely successful in reducing tariff barriers,” said Sen. Baucus last month.